Patrol finds store price discrepancies

Error rate is low, county says that shows program works

Businesses in San Diego County have been issued $130,000 of fines in the past two years for pricing errors that the county acknowledges can be unintentional.

The 14-year-old program costs the county more than $600,000 a year and has apparently been very effective at enforcing accurate pricing, judging by the minuscule level of overcharges found.

A U-T Watchdog review of data showed inspectors found overcharges of one-tenth of 1 percent of bills checked in September — that is, $94 out of $64,278 in transactions reviewed. That may seem like a tiny fraction, but multiplied over $12 billion in quarterly transactions in the county, it could add up.

Worthwhile program protecting consumers
61% (224)

Useless bureaucracy, hurting business
26% (95)

Both
10% (37)

Other
2% (9)

365 total votes.

Undercover county inspectors enter businesses unannounced, gather up a buggy or basket of goods, and check to make sure the price advertised matches what rings up at the register.

While the county and some economists laud the effort as a safeguard against faulty pricing, other experts found the enforcement excessive and cautioned that it could prevent new businesses from flourishing.

“I’m all for consumer protection, but I think this is an area that is overkill, to have inspectors go out and check the prices,” said Clark Howard of Atlanta, who hosts a nationally syndicated broadcast about “how to save more, spend less and avoid getting ripped off.”

Art Carden, economist and research fellow with the Independent Institute in Oakland, CaliforniaSubmitted

+Read Caption

Art Carden, economist and research fellow with the Independent Institute in Oakland, California

“If firms are pricing deceptively, they’ll develop bad reputations. And further, if they’re actually engaging in fraudulent practices, that’s something that consumers can take them to court over,” said Carden, an economist and research fellow with the libertarian Independent Institute in Oakland.

“This program was created to protect consumers, and it’s important that the county continues to watchdog businesses that may be overcharging customers,” Jacob said. “Just within the past few years, the county has uncovered price discrepancies at many stores, including prominent retailers such as Wal-Mart and Rite Aid, so it’s critical that retailers continue to be held accountable.

“Every single overcharge the county uncovers is likely multiplied by the number of customers who bought that same item on that same day – and that can add up to big money.”

The county program’s $600,000 cost includes personnel, but not overhead. It is paid for in part by the registration fees that more than 4,300 businesses pay annually, including gas stations, grocery stores and clothing retailers.

Among those fined recently was Jimmy Gilchriest, whose family has owned a lumber-and-hardware store in Ramona since 1989. The store was issued $500 in fines following inspections last fall and in March, for errors that amounted to $4.50 out of $320.25 worth of items.

“If we made a mistake, we will 100 percent honor what’s lower,” Gilchriest said, adding that he likes the idea of being held accountable but feels the fines are not necessary to reinforce what he already knows is good business practice.

Following the county inspection, Gilchriest’s staff of 30 repriced the entire store.

“It probably cost us a couple hundred dollars in stickers, two weeks in man hours, but we wanted to make sure we were up to date,” he said.

The law is aimed at compliance, said Nancy Stalnaker, who heads up the county program.

“If that’s what it takes him, a week of work, then he’s doing that to ensure that his customers are getting the prices that are advertised,” she said.

Document

The median fine in the two-year period reviewed was $150. The fines, set in state regulations, can range from $50 to $1,000 per item found to be in error, and the county’s schedule calls for an inspection at each registered business every three years, unless a consumer has lodged a complaint or the business is being re-inspected.

In California, the law requires 100 percent pricing accuracy, while some other states allow for some human error by adopting a 98 percent standard, according to a retail group. In cases of small discrepancies, county staff may decide to reinspect the business and, if it passes, forego a fine, Stalnaker said.

“Most of the stores, they’re not intentionally trying to cheat anybody, and we understand that,” Stalnaker said. “Sometimes they feel bad when we write them a violation. We know most of the time it’s human error, and they forgot to take a price sign down.”

The highest single fine in the two-year period reviewed was levied against the Sears Outlet Center on Carmel Mountain Road. The fine for that reinspection following a complaint was $3,100.

The store had signs over racks of clothing promoting a 30-to-60-percent off sale, but some of the individual items were not marked down 30 percent. For example, a pair of infant-size pants was ringing up at the register for $4 while the price advertised was $3.20. The bill was $60 for the items the county sampled, or $18.21 more than what was advertised in the store.

“We strive to comply with all applicable legal requirements, and we continue to take corrective actions,” Sears said in a statement.

A Walgreens on Cannon Road in Oceanside overpriced a two-stick pack of Elmers glue, charging $2.58 when the price was marked down to $1.29.

The store was fined $250.

The H&M clothing store on Calle Barcelona in Carlsbad had undercharges of $20 and overcharges of $37.85. The store was fined $1,200.

Walgreens said it was unable to comment on the infraction but that its policy is to honor the lowest advertised or displayed price. H&M did not respond to a request for comment.

Howard, the consumer expert, offered these tips for shoppers:

• Unload the cart from the front, not the back, and keep an eye on prices as they appear on the screen.

• If you are purchasing an item because it’s on sale, or a buy-one-get-one special, write the price down or snap a photo of the price tag with your phone. Use your notes to verify the price at the cash register.

University of San Diego economist Alan Gin favors the county’s approach. Even though the system adds to the cost of doing business, the end result could be positive if consumers have greater confidence in prices, Gin said.

“What we don’t know is if there was no program, would there be a bigger problem? The data doesn’t show that,” Gin said.

Carden is not so sure.

“The winners are going to be established companies, and the losers are going to be potential entrants into the market,” he said. “Eventually there comes a point that things will get so expensive and so inconvenient that fewer people will be doing things in San Diego.”

Carden, who lives in Alabama, visited San Diego this summer for a conference. He purchased a shirt at a downtown department store. The shirt’s sticker price was 50 bucks, but it ended up costing half that amount.